C3 Sources of Finance MPA

Which of these is NOT a reason a business needs finance?

• Start-up the business

• The Grow/Expand the business

• To Sell the business

• Working capital (i.e to maintain a business)

'Internal' sources of finance are.....

• Finance that comes from within the business

• Finance that comes from the owner of the business

• Finance that comes from outside the business

• Finance that comes from the bank

'External' sources of finance are.....

• Finance that comes from within the business

• Finance that comes from the owner of the business

• Finance that comes from outside the business

• Finance that comes from the bank

Which of the following is a reason why a new business start-up would need finance?

• To fund expansion

• To pay for replacement equipment

• To carry out maintenance on a new piece of machinery

• To buy equipment

A successful sole trader wants to raise funds to open a second restaurant and is eager to retain full control of the business. Which of the following sources of finance would be the most appropriate to fund this expansion?

• Venture capital

• Bank Loan

• Credit Card

• Overdraft

An established seasonal partnership is experiencing small cash flow problems during the winter months. Which of the following would be a suitable source of finance to overcome this problem?

• Credit card

• Venture capital

• Bank loan

• Government Grant

A possible drawback to an entrepreneur of using personal savings to finance a new business enterprise is:

• The entrepreneur may lose control of the business

• The amount will need to be repaid with interest

• The amount available may be limited (i.e not enough!)

• It is an expensive form of finance

To which of the following businesses might a supplier be reluctant to issue trade credit?

• A new business start-up

• A successful franchise

• An established partnership

• A reputable private limited company

What is an advantage of using owners' funds to finance a business?

• With less money in their savings account the owner has a poorer credit rating

• There is less risk for the business if they are financed by the owner's own funds

• There is less risk for the owner if they put their own finance into the business

• The business will have fewer liabilities (debts)

When using which of the following sources of finance, would interest ALWAYS need to be paid?

• Venture capital

• Trade credit

• Owner's funds

• Bank Loan